From 10 fintech apps… to one? ?? The future is consolidated

Greetings to all CFOs, finance pros, and fintech enthusiasts!?

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We started this newsletter one year ago with 0 subscribers. There are now an incredible 20,200+ of you ????

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That’s exactly enough people to fill the stadium of Notts County F.C. in Nottingham, England. Who knew??

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This week, we’re talking about fintech consolidation???

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What you need to know right now:?

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Rakuten Could Combine Bank and FinTech Operations - PYMNTS.com ?

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Japanese conglomerate Rakuten is planning to combine its banking and fintech operations, according to a press release with this astonishingly verbose title:?

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“Notice Concerning Execution of a Memorandum of Understanding Regarding Reorganization of Rakuten’s FinTech Business. ”?

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Wow, guys. Don’t get us too excited.?

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Fear not, however - we read the release on your behalf. And what it says could have really interesting ramifications for the wider fintech industry.?

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Basically, Rakuten is thinking about consolidating their banking, insurance, securities, card company, and other fintech businesses into one group.?

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This is a huge deal because Rakuten is, well, huge. One of Japan’s biggest financial services providers, the company also sponsored Barcelona FC for a while (last football/soccer reference - I promise).?

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We think they’ve spotted an important trend…?

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For years, consumers were willing to use lots of different fintech apps because each promised enough value and utility to make it worth switching between different apps for different needs.?

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And because traditional banks were so behind the curve on mobile technology, there was no competition for fintech players to worry about. Even if you held a credit card and a current account with one bank, chances were you still had to use separate apps for them. From the same bank!?

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Now, however, banks and the bigger fintechs are getting their act together. They understand that consumers want to access services in one place. And a recent PYMTS survey backs this idea up:?

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“Close to 7 in 10 consumers in the U.S. and Australia said they would merge their digital retail and grocery shopping and bill tracking into a one-stop app, with convenience-focused consumers overwhelmingly saying they prefer to manage their banking, investment and various shopping activities via an everyday app.”?

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Source: PYMNTS.com ?

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In the UK and Europe, fintech superapp Revolut seems to add a new service almost every month, from stocks and commodities investing to crypto and insurance.?

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Expect other major banks to follow Rakuten’s lead and start heading off competition from the Revoluts of this world.?

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It’s 2024, after all. People simply aren’t going to tolerate slow, unreliable, and complicated services any more.?

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We want it all (in one place) and we want it now.?

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What else to read:?

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Crypto’s new clothes may not prove a good fit - Financial Times?

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• The FT’s (consistently brilliant) Katie Martin observes that there's a concerted effort in the cryptocurrency community to legitimize and integrate cryptocurrencies into mainstream financial systems.?
• This includes notable achievements like the approval of bitcoin-based ETFs in the U.S., attempts to gain recognition in the UK, and collaborations between traditional financial institutions and crypto companies to create sophisticated crypto indices.?
• Despite these efforts to dress up crypto as a conventional asset class, the article suggests skepticism about the practicality and value of these endeavors, highlighting the inherent volatility and the mix of legitimate and questionable aspects within the cryptocurrency world.?

What should we expect to see from embedded finance in 2024? - The Fintech Times?

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• The global embedded finance market is currently valued at around $92 billion and is expected to reach approximately $228 billion by 2028, marking a 148% growth in four years.?
• Embedded finance is increasingly integrated into a wide range of products and services, such as retail, ride-hailing apps, and super-apps, enhancing consumer experiences by reducing friction and streamlining processes.?
• Adam Shapiro from Klaros Group emphasizes the need for banks and service providers to develop operations, risk, and compliance-as-a-service capabilities to support the scaling of embedded finance.?
• Adam Edwards of Satago notes a shift towards B2B embedded finance partnerships, enabling businesses to offer more diverse and flexible finance options to their customers through trusted banking relationships.?
• Karine Martinez of Edenred Payment Solutions highlights recent significant partnerships in the embedded finance space, indicating a focus on reliability, compliance, and better partnerships between BaaS companies and their customers.?

?That's it for this edition. See you next time!